»5 Minute Wrap Up by Equitymaster

On This Day - 2 NOVEMBER 2018
Insiders Are Buying 40% of Our Recommended Companies. What About You?

Kunal Thanvi, Research analyst

The Indian Share Markets are going through one of the most volatile environments in recent times.

With black shadows in the NBFC space along with the fallout of IL&FS, the recent rift between the Reserve Bank of India and the government is creating the next phase of un-certainty.

Both domestic and foreign investors have turned cautious.

However, we've been telling subscribers, perhaps this is the best time to invest for the long-term. We strongly believe this is the best time to invest in high quality companies in a staggered manner.

And we are seeing this approach followed by our super investors and promoters running their own business.

As Smart Money Secrets subscribers know, there are three indicators that helps us find where the smart money is flowing in the markets.

And these three indicators are:

  1. Super investors holding more than 1% in the company.
  2. Super investors buying through bulk or block deals.
  3. Insider buying i.e. promoters buying their own stock.

Of the three, the strongest indicator is promoters buying their own stock.

We always try to find owner-operators to recommend in Smart Money Secrets.

--- Advertisement ---
7 Stocks to Profit from This Market Crash

7 Stocks To Profit From This Market Crash
Tanushree, the editor of StockSelect believes that the current market downturn has thrown up some great investing opportunities…

And she has put together a special report, 7 Stocks to Profit from This Market Crash, to share with her subscribers.

Here's how you can join them – and claim a FREE copy of this report. Just click here.

If you get in now, you can even claim an additional year of access to StockSelect, absolutely free.

Details here.

I have always believed, coming from a business family, that owners running their own business have perfectly aligned incentives. Since their livelihood is dependent on the business they run, they are very proactive and dynamic in running their business.

An 'owner-operated' company is one led by the promoter(s) or founder who owns the majority stake in the company and runs the business too.

I believe the owner-operator is truly incentivised to think long-term and has the capacity to suffer in the short-term by avoiding fads and staying focused on sustainability.

Look at examples like Eicher Motors, Symphony, and Ambika Cotton. These companies were present in either highly competitive or commoditised markets but these owner operators created niches for themselves.

One of the most important pillars of my Smart Money Secrets stock recommendation service is to find companies that are run by owner operators with their skin in the game.

We believe apart from a strong business it is important to have strong management with incentives perfectly aligned.

Now with the correction in the market, we are seeing majority of the promoters putting their money into their own stock.

This means...

  1. They have high confidence on their own business in times to come.
  2. By betting their own money, they are increasing their skin in the game further aligning the incentives.
--- Advertisement ---
Can You Guess What These 7 Stocks Have in Common?

You'll never guess what these 7 stocks have in common…

One's a company from the Oil & Gas Sector, the second is a stock Benjamin Graham would have bought, the third is a leading global tech provider – and then there are 4 others.

What they have in common is that they're all part of a very special report Tanushree Banerjee, editor of StockSelect, is rushing out to her subscribers.

And the reason this report is so critical, is because Tanushree believes there couldn't be a better way to profit from this market crash.

The report is titled '7 Stocks to Profit from This Market Crash' and you can claim a free copy, by clicking here.

We can't say how long these stocks will stay in the BUY zone, so the longer you wait, the more your chances of missing out.

Claim your FREE copy of Tanushree's report now.

Out of the seventeen stocks we've recommended in Smart Money Secrets, we see seven companies where owner-operators have increased their stakes between March and September 2018. See today's Chart of the Day for more.

We believe, this is one of the strongest smart money indicators and it could be best time to buy into or increase stake in these companies.

Chart of the Day

Talking about owner-operators and the stocks we've recommended in Smart Money Secrets - Sarvajeet and I pulled some interesting data.

As per the BSE fillings, seven out of the seventeen companies have seen their promoters buying their own stock. And as per the insider buying disclosures, these promoters are still buying from the open market.

Here's the chart showing the increase in the promoter's stake over March and September 2018.

Insider Buying: These Owner Operators Are Taking Advantage of the Correction

We believe insider buying is one of the strongest smart money indicators. And as we can see in the chart, owners are increasing their stakes in many of our recommended stocks.


Kunal Thanvi
Kunal Thanvi (Research Analyst)
Editor, Smart Money Secrets

PS: You can now track the moves of 40+ super investors of India and receive cherry-picked recommendations of the most lucrative stocks bought by these market gurus. Smart Money Secrets is a premium stock recommendation service based on following the smart money, the market activities of the very best investors in India. Get access to this exclusive stock recommendation service here.

Copyright © Equitymaster Agora Research Private Limited. All rights reserved.

Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement

Disclosure & Disclaimer: Equitymaster Agora Research Private Limited (Research Analyst) bearing Registration No. INH000000537 (hereinafter referred as 'Equitymaster') is an independent equity research Company. The Author does not hold any shares in the company/ies discussed in this document. Equitymaster may hold shares in the company/ies discussed in this document under any of its other services.

This document is confidential and is supplied to you for information purposes only. It should not (directly or indirectly) be reproduced, further distributed to any person or published, in whole or in part, for any purpose whatsoever, without the consent of Equitymaster.

This document is not directed to, or intended for display, downloading, printing, reproducing or for distribution to or use by, any person or entity, who is a citizen or resident or located in any locality, state, country or other jurisdiction, where such distribution, publication, reproduction, availability or use would be contrary to law or regulation or what would subject Equitymaster or its affiliates to any registration or licensing requirement within such jurisdiction. If this document is sent or has reached any individual in such country, especially, USA, Canada or the European Union countries, the same may be ignored.

This document does not constitute a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Our research recommendations are general in nature and available electronically to all kind of subscribers irrespective of subscribers' investment objectives and financial situation/risk profile. Before acting on any recommendation in this document, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek professional advice. The price and value of the securities referred to in this material and the income from them may go down as well as up, and subscribers may realize losses on any investments. Past performance is not a guide for future performance, future returns are not guaranteed and a loss of original capital may occur. Information herein is believed to be reliable but Equitymaster and its affiliates do not warrant its completeness or accuracy. The views/opinions expressed are our current opinions as of the date appearing in the material and may be subject to change from time to time without notice. This document should not be construed as an offer to sell or solicitation of an offer to buy any security or asset in any jurisdiction. Equitymaster and its affiliates, its directors, analyst and employees will not be responsible for any loss or liability incurred to any person as a consequence of his or any other person on his behalf taking any decisions based on this document.

As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results.

SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.

Equitymaster Agora Research Private Limited (Research Analyst) 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: info@equitymaster.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407